Glimpses of a low carbon future amid Port Kembla’s coal and steel

For South Coast Labour Council secretary Arthur Rorris, intensifying debate over what a low-carbon future may mean for Australia’s industrial centres is a signal the rest of the country may finally have caught up with the Illawarra.

Standing beneath a towering smokestack at Port Kembla’s BlueScope steelworks last week, Rorris says the region’s unions concluded in 2009 that climate change was happening and that there was just one question they needed to answer.

‘It’s going to be massive’ if the steelworks were to close: Arthur Rorris, co-convener of Recharge Illawarra, at Bluescope’s facilities at Port Kembla.Credit: Janie Barrett

“That’s whether we are going to share in the jobs created by the coming revolution, ” he says. “Or will we stand on the sidelines and watch the rest of the world take them?”

Often left out of discussions about a so-called transition off fossil fuels, the area around Wollongong hosts the nation’s largest steelworks, fed by coal mined in a hinterland that also includes several dams serving greater Sydney.

Boasting a deepwater port and heavy industry with two centuries of heritage, the Illawarra rivals the NSW Hunter and Victoria’s Latrobe Valley as a region with the most at stake – and perhaps most to gain – if Australia can do its share of the decarbonisation needed to curb global heating. So far, there is no national effort to steer such a shift.

“If steel goes, forget the town,” Rorris says. “It’s going to be massive.”

The future, though, may not be as gritty as the past and present. Across the shipping canal, not far from where Rorris stands, preparations are under way for a gas and potentially hydrogen processing site being developed by billionaire Andrew “Twiggy” Forrest.

Still, navigating from the known will need more courage and co-ordination than is currently on display.

Take BlueScope’s steelworks, which produce about 3.2 million tonnes of the metal a year over a sprawling campus that has four railway stations and its own postcode. It generates about 1 per cent of the state’s economic output and one-tenth of the Illawarra’s.

The company earned $1.2 billion in its latest financial year, a 13-fold increase on a year earlier. BlueScope plans to pour $800 million into relining a traditional blast furnace, and has declared it will be a “fast follower” rather than a leader in the emerging “green steel” industry that substitutes hydrogen for coking coal.

A BlueScope worker sits at the front of one of the company’s “torpedoes”, a wagon that takes 180 tonnes of molten iron per tube from the blast furnace to a steel-processing plant.Credit: Janie Barrett

Chris Page, head of future technologies and a 28-year BlueScope veteran, doesn’t think the threat is imminent. Sweden’s HYBRIT, which last month claimed to have produced the world’s first coal-free steel, took three months to make 100 tonnes of it, he says.

Although modest on a global scale, the Port Kembla site alone makes about 8000 tonnes of steel a day.

“We’ve got to learn how to use hydrogen,” Page says. “That’s why the timeframe is decades, not months.”

The company plans to spend $150 million over five years to cut greenhouse gas emissions, but only at the annual rate of 1 per cent to 2030.

However, more proximate challenges for Illawarra’s workforce and even BlueScope could come from disruptions to the region’s coal supplies.

Opposition to the extraction of the fossil fuel has been growing not only from climate change activists but also those fearing long-term damage to Greater Sydney’s water catchment from mine subsidence.

Climate change activists (from left) Naia Webb, Claire Rogers, and Tatianna Hatzopoulos, outside Russell Vale colliery near Wollongong, which has received approval to expand underground mining. Credit: Janie Barrett

Federal Environment Minister Sussan Ley overlooked those worries only this month when she approved Wollongong Coal’s plan to reopen its Russell Vale colliery so it could extract 3.7 million tonnes of coal over five years.

A panel outside the mine notes European colonists first identified the exposed fuel in a nearby rock face when shipwrecked sailors stumbled ashore in 1797 at what they promptly if unimaginatively named Coalcliff.

Naia Webb, a 20-year-old law and creative arts student, and a member of the Illawarra Climate Coalition, says her grandfather had worked in coal mines. Even so, their days should be numbered.

“You can be proud of your history and all that, but also recognise that it’s not the future and we have to move on,” Webb says, before unveiling a protest poster as trucks rumble in and out of the Russell Vale pit site as preparations for a reopening gather pace.

An aerial view of the mine head at Wollongong Coal, where preparations to reopen the Russell Vale mine are gathering pace.Credit: Janie Barrett

High pay for some mine worker make the jobs “crazily appealing”, she says, adding, though, that those jobs can be only short-lived if climate action is going to be serious.

“It is important that we protect our local community from being left behind in this global transition away from coal,” Webb says.

Another nearby battle over coal is brewing. In February, NSW’s Independent Planning Commission rejected plans by ASX-listed South32 to extend the Dendrobium mine out to 2048, citing its potential to “significantly impact” the water catchment among the reasons.

The $956 million project would have created jobs but the extra 78 million tonnes of coal would also have resulted in about 250 million tonnes of CO2-equivalent (CO2-e).

Kaye Osborn from Protect Our Water Alliance says Sydney’s Special Areas “are off-limits to the public to protect them from degradation and contamination. They should be off limits to extractive industries also”.

“Greater Sydney is the largest city in the driest inhabited continent on earth and yet we are the only city that allows coal mining this close to its water storages,” she says, noting Dendrobium’s proximity to Avon and Cordeaux reservoirs.

South32 has launched a judicial review of the IPC verdict in the NSW Land and Environment Court, while also assessing options to revise its mine plan.

A spokesman said: “The Dendrobium Mine Extension Project received widespread support from community, government and industry throughout the approvals process. We have a long history of operating safely and responsibly in the Illawarra region and the proposed [extension] would provide major economic and social benefits for the Illawarra region and NSW.”

The mine provides an important source of coal for BlueScope but the IPC also noted South 32 had opted to prioritise digging coal from the Bulli seam, pushing back the Wongawilli blend sought by the steelmaker to 2043. The Planning commission said: “The commission does not accept the suggested dependence of BlueScope Steelworks on ongoing access to the Wongawilli Seam Coal from this Project.″⁣

Page says: “If Dendrobium doesn’t get up, beyond about 2025 we’ll have to look at alternative supplies.″⁣

Academics, though, are not impressed by BlueScope’s emissions-cutting ambitions, which run at about 10.5 million tonnes CO2-e a year.

Says Australian National University College of Engineering associate professor John Pye: “That decision to build a new blast furnace is a fork in that road’s College of Engineering. It doesn’t seem they are going to be on the side of pushing it as fast as possible”, as only about 15 per cent reduction is possible with limited hydrogen use.

As Europe plans its carbon border adjustment mechanism to put a tax on steel imports from countries with weak climate policies by 2030, green steel may get additional global impetus. Pye says: “It’s going to give everyone a kick along.″⁣

BlueScope’s No.5 blast furnace. The company is betting existing technology has a few decades to run.Credit: Janie Barrett

University of Wollongong’s Energy Futures Network director Ty Christopher says hydrogen isn’t the only alternative for BlueScope to ditch coal.

“There are alternatives to the use of coking coal that are less carbon-intensive and that don’t require mining. The use of biochar is one of those technologies,” he says. “It’s the focus of our research at the moment and it’s at a critical stage.”

Politicians from both major parties understand that change in the Illawarra is inevitable.

NSW Energy Minister Matt Kean says: “You’ve got to diversify the economies in the Illawarra and the Hunter.″⁣

Both regions have a competitive advantage to develop a hydrogen-based economy, including “a natural use for it”, given their heavy industry, ports and an available skilled workforce, he says.

“Both the Hunter and the Illawarra are poised to become green hydrogen production and export powerhouses, which is why they have been declared the first hydrogen hubs in NSW.”

NSW Energy Minister Matt Kean says the government will release its hydrogen strategy soon to try to ensure investors pick places like the Illawarra in the future.Credit: Dominic Lorrimer

Kean says he held recent talks with Forrest, including on the prospect of developing huge renewable energy plants in the Wagga Wagga region to power a green hydrogen production process in the Illawarra.

The government has also committed $70 million from its Net-Zero Industry and Innovation Program for hydrogen in the Illawarra and the Hunter. That supplements the $78 million NSW has tipped into a $300 million Tallawarra B gas plant expansion by EnergyAustralia so that it can take at least 200 tonnes of green hydrogen annually from 2025.

Kean says: “We are currently finalising our Hydrogen Strategy, which will put NSW in pole position to produce and export one of the most critical technologies needed to reach net zero by 2050, green hydrogen.″⁣

Forrest’s Squadron Energy unit, meanwhile, is working on a 635MW Port Kembla power station that would initially burn gas imported at a new terminal with the aim of converting entirely to hydrogen produced with renewables by 2030.

Squadron says, noting the plant aims to begin operating by 2023-24 after it secured so-called Critical State Significant Infrastructure from the state government last month: “It is hoped the potential demand for green hydrogen from the Port Kembla power station will help drive the development of a new industry in the Illawarra..

Paul Scully, state Labor MP for Wollongong and a former chief operating officer of the Australian Institute for Innovative Materials at the University of Wollongong, says that “just as the economy evolves, steelmaking must evolve, too”.

Labor MP Paul ScullyCredit: Janie Barrett

Three decades ago, his former university had 3000 students and BlueScope had 20,000 workers. Now, pre-COVID, the university counted 36,000 domestic and international students and BlueScope has 3000 direct employees.

The Illawarra’s lifestyle could also lure residents who might otherwise pick Penrith or Camden in Sydney’s western and southern fringes to shell out for a similar $750,000 first home. “[Here], you’re 10 minutes to the beach,” Scully says.

The government expanded its renewable energy zones to include the Illawarra in part because of urging by Labor.

One investor in the wings is Oceanex Energy chief executive officer Andy Evans. His company is eyeing three wind farm projects off the NSW coast, including a $10 billion two-gigawatt project to be located about 20 to 30 kilometres east of Wollongong.

BlueScope employees (from left) Chris Page, Michael Reay, and Craig Nealon walk past part of the blast furnace operating at Port Kembla.Credit: Janie Barrett

Evans says of the Illawarra, given its energy demand and its proximity to a major transmission line: “You almost couldn’t script it any better for offshore wind.″⁣

The company aims to tether more than 100 floating turbines of 15-megawatt capacity each with blade heights reaching 200 metres.

“We’ve sought to reduce any visibility,” says Evans, who predicts the turbines will appear only as “small dots” on the horizon.

Significantly, the steel-hungry wind towers could use 35 to 65 per cent local content, potentially creating a major new customer for BlueScope.

Ken Baldwin, a physics professor and director of ANU’s Grand Challenge: Zero-Carbon Energy for the Asia-Pacific, says the Illawarra is not guaranteed a big role in renewables.

“You have to ask, what is the competition?” Baldwin says. The Pilbara, with “the sheer economies of scale” of its rich solar and wind resources, is a major alternative for a hydrogen production hub. Western NSW, too, could be a strong rival if transmission links are built.

Still, the Illawarra does offer an ecosystem with the existing know-how and infrastructure that could be competitive if businesses and governments pull in the same direction.

The challenges point “to a role for governments as industries shift and change”, Baldwin says. “[They] can corral individual players in the right combination. That’s an important role.

“We don’t want a repeat of the industrial revolution, during which governments did nothing for planning and co-ordination,” he says. “The rust belts [in the US and elsewhere] are a microcosm and an example of what can go wrong.”